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It’s reasonable to expect an “extended period” of low interest rates, according to the boss of the central bank, which could trigger a confidence spike from property buyers.
The Reserve Bank has been keeping rates at historic lows to trigger consumer spending and fire up confidence.
Property buyers have seen the benefits of cheaper interest rates on their mortgages, and this “lower for longer” environment is tipped to inspire confidence in borrowers and encourage more new entrants into the market.
For some key economic indicators, like wages growth and inflation, the lowered rates have not been a sufficient activator to date. As such, more rate cuts could be on the cards — which could mean even cheaper access to finance for borrowers and buyers.
“Whether or not further monetary easing is needed, it is reasonable to expect an extended period of low interest rates,” Reserve Bank governor Philip Lowe said.
“On current projections, it will be some time before inflation is comfortably back within the target range.
“The board is strongly committed to making sure we get there and continuing to deliver an average rate of inflation of between 2 and 3 per cent.
“It is highly unlikely that we will be contemplating higher interest rates until we are confident that inflation will return to around the midpoint of the target range.”
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